ASSEMBLY, No. 1108
STATE OF NEW JERSEY
208th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 1998 SESSION
Sponsored by:
Assemblyman JOSEPH AZZOLINA
District 13 (Middlesex and Monmouth)
Assemblywoman MARION CRECCO
District 34 (Essex and Passaic)
Co-Sponsored by:
Assemblymen Blee and LeFevre
SYNOPSIS
Revises provisions of the consumer fraud act.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
(Sponsorship Updated As Of: 9/15/1998)
An Act concerning consumer fraud and amending and supplementing P.L.1960, c.39 (C.56:8-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) As used in this act:
"Consideration" means any money or property, token, object or article exchangeable for money or property, any form of credit or promise directly or indirectly contemplating transfer of money or property or any interest therein. Consideration shall also include a donation, but shall not include any tax or fee paid to a government agency.
"Director" means the Director of the Division of Consumer Affairs in the Department of Law and Public Safety.
"Element of chance" means any factor that is not under the entrant's control which effects the outcome of a sweepstakes, notwithstanding that the entrant's skill may be a factor.
"Odds of winning" means a ratio in which the numerator equals the actual number of prizes to be distributed in a sweepstakes and the denominator equals the total number of possible entrants eligible for that prize in the sweepstakes. If the actual number of possible entrants eligible for a prize cannot be determined, a reasonable, accurate estimate for the denominator may be substituted.
"Premium" means a gift, benefit, award, cash award or item of equal value, whether tangible or intangible, provided to each person receiving a promotion notification.
"Prize" means a gift, benefit, award, cash award or other item of value, whether tangible or intangible, offered in sweepstakes.
"Promotion" means the sale or advertisement of any merchandise or real estate which involves the prospective provision of a premium to all eligible participants, in which the element of chance is absent.
"Sweepstakes" means a process for awarding prizes in which the element of chance is present and no consideration is required, whether the process is referred to as a sweepstakes, contest, competition, game, puzzle, drawing or by another name; except that "sweepstakes" does not include activities prohibited by Title 2C of the New Jersey Statutes.
2. (New section) It shall be an unlawful practice to:
a. Condition the receipt of a prize or entry into a sweepstakes upon the provision of consideration or submission to a sales promotion effort, or to provide notification of such a condition to any person by any means;
b. In any way relate the odds of winning a sweepstakes to the provision of consideration or submission to a sales promotion effort, or to provide notification thereof to any person by any means;
c. Use, in connection with a sweepstakes, any written or oral statement, type size, illustration, graphic depiction or design which has the capacity to mislead or deceive the recipient concerning a material fact relating to:
(1) the terms and conditions of eligibility;
(2) the number or value of the prizes to be awarded;
(3) the odds of winning the sweepstakes or the odds of winning a particular prize; or
(4) such other information as may be required by the director by regulation;
d. Fail to include in a sweepstakes notification, in prominent, readily understandable terms, the following:
(1) that no purchase or other consideration is necessary;
(2) the total number of prizes to be awarded;
(3) the odds of winning each prize to be awarded;
(4) the value of each prize to be awarded;
(5) the date by which all prizes are to be awarded;
(6) information concerning eligibility; and
(7) such other information as may be required by the director by regulation;
e. Fail to award or distribute all prizes in accordance with the representations contained in the sweepstakes notification;
f. In connection with a promotion, represent or in any way imply that a premium is free of charge if that premium is conditioned upon the provision of consideration or submission to a sales promotion effort;
g. Use, in connection with a promotion, any written or oral statement, type size, illustration, graphic depiction or design which has the capacity to mislead or deceive the recipient concerning a material fact relating to:
(1) the terms and conditions of eligibility or availability;
(2) the value of the premium to be provided; or
(3) such other information as may be required by the director by regulation;
h. Fail to distribute or otherwise make available premiums within the dates represented;
i. Transfer funds, through any means, from a bank or credit card account of another person without that person's express written consent;
j. Engage in such other practices as may be proscribed by the director by regulation.
3. (New section) Failure of a foreign corporation to obtain a certificate of authority pursuant to N.J.S.14A:13-3 shall be an unlawful practice and a violation of P.L.1960, c.39 (C.56:8-1 et seq.) if that corporation engages in sweepstakes or promotion activities in New Jersey.
4. (New section) The director, pursuant to the provisions of the Administrative Procedure Act, P.L.1968, c.410 (C.52:14B-1 et seq.), shall promulgate rules and regulations necessary to effectuate the purposes of this act, including, but not limited to, exemptions from the disclosure requirements contained herein.
5. Section 3 of P.L.1960, c.39 (C.56:8-3) is amended to read as follows:
3. When it shall appear to the Attorney General that a person has engaged in, is engaging in, or is about to engage in any practice declared to be unlawful by this act, or when [he] the Attorney General believes it to be in the public interest that an investigation should be made to ascertain whether a person in fact has engaged in, is engaging in or is about to engage in, any such practice, [he] the Attorney General may:
(a) Require such person to file on such forms as are prescribed a statement or report in writing under oath or otherwise, as to all the facts and circumstances concerning the sale or advertisement of merchandise by such person or the issuance of any sweepstakes or promotion notification, and such other data and information as [he] the Attorney General may deem necessary;
(b) Examine under oath any person in connection with the sale or advertisement of any merchandise or any sweepstakes or promotion notification;
(c) Examine any merchandise or sample thereof, any prize or premium, record, book, document, account or paper as [he] the Attorney General may deem necessary; [and]
(d) Pursuant to an order of the Superior Court impound any record, book, document, account, paper, [or] sample of merchandise , prize or premium that is produced in accordance with this act, and retain the same in his possession until the completion of all proceedings in connection with which the same are produced; and
(e) Issue a notice of violation which may, at the discretion of the Attorney General, give rise to a hearing pursuant to section 1 of P.L.1967, c.97 (C.56:8-3.1).
(cf: P.L.1960, c.39, s.3)
6. Section 5 of P.L.1960, c.39 (C.56:8-5) is amended to read as follows:
5. Service by the Attorney General of any notice of violation pursuant to section 3 of P.L.1960, c.39 (C.56:8-3) or any notice requiring a person to file a statement or report, or of a subpoena upon any person, shall be made personally within this State, but if such cannot be obtained, substituted service therefor may be made in the following manner:
(a) Personal service thereof without this State; or
(b) The mailing thereof by registered mail to the last known place of business, residence or abode, within or without this State of such person for whom the same is intended; or
(c) As to any person other than a natural person, in accordance with the Rules Governing the Courts of the State of New Jersey pertaining to service of process, provided, however, that service shall be made by the Attorney General; or
(d) Such service as the Superior Court may direct in lieu of personal service within this State.
(cf: P.L.1960, c.39, s.5)
7. Section 11 of P.L.1960, c.39 (C.56:8-11) is amended to read as follows:
11. In any action or proceeding brought under the provisions of this act, the Attorney General shall be entitled to recover costs for the use of this State, including, but not limited to, costs of investigation, expert witness fees, attorney's fees, transcript costs, and the costs of an administrative proceeding brought pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).
(cf: P.L.1960, c.39, s.11)
8. Section 1 of P.L.1966, c.39 (C.56:8-13) is amended to read as follows:
1. Any person who violates any of the provisions of the act to which this act is a supplement and who has not previously violated this act shall, in addition to any other penalty provided by law, be liable to a penalty of not more than $7,500 for the first [offense and not more than $15,000 for the second and each subsequent offense] violation of this act.
For a second violation of this act, or if a person is found liable for more than one violation of this act within a single proceeding, the liability for the second violation shall not exceed a civil penalty in the amount of $15,000.
For a third violation of this act, or if a person is found liable for more than two violations of this act within a single proceeding, the liability for a third or succeeding violation shall not exceed the amount of $15,000 for each additional violation.
(cf: P.L.1991, c.332, s.1)
9. This act shall take effect immediately, except for section 3 of this act which shall take effect on the 60th day after enactment.
This bill amends and supplements various provisions of the consumer fraud act (C.56:8-1 et seq.). Under current law, any person who violates the provisions of the consumer fraud act is liable to a penalty of not more than $7,500 for the first offense and not more than $15,000 for the second and each subsequent offense. The bill revises the act's penalties by providing that any person who violates the consumer fraud act and who has not previously violated its provisions shall be liable to a penalty of not more than $7,500 for the first violation of the act. In a case of a second violation of the act, or if a person is found liable for more than one violation of the act within a single proceeding, the penalty for the second violation shall not exceed $15,000. For a third violation of the act, or if a person is found liable for more than two violations of the act within a single proceeding, the penalty shall not exceed $15,000 for each additional violation.
The bill also amends section 11 of P.L.1960, c.39 (C.56:8-11), which provides that in any action or proceeding brought under the provisions of the consumer fraud act, the Attorney General shall be entitled to recover costs for the use of New Jersey. The bill delineates particular costs that can be so recovered including, but not limited to, costs of investigation, expert witness fees, attorney's fees, transcript costs, and the costs of an administrative proceeding brought pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).
In addition, the bill amends section 3 of P.L.1960, c.39 (C.56:8-3) to allow the Attorney General to investigate suspected violations of the consumer fraud act with regard to sweepstakes or notification of a promotion. The Attorney General may issue a notice of violation which may, at the discretion of the Attorney General, give rise to a hearing pursuant to section 1 of P.L.1967, c.97 (C.56:8-3.1). As further provided in the bill, service by the Attorney General of any such notice shall be made personally within this State, but if that cannot be obtained, substituted service may be made in accordance with the procedures already contained in section 5 of P.L.1960, c.39 (C.56:8-5).
This bill provides that it shall be a violation of the consumer fraud act for any person conducting an advertising or promotion scheme involving a sweepstakes to engage in a number of activities specified in the bill. These activities include:
(1) conditioning the receipt of a prize or entry into a sweepstakes upon the provision of consideration or submission to a sales promotion effort, or to providing notification of such a condition to any person by any means;
(2) relating the odds of winning a sweepstakes to the provision of consideration or submission to a sales promotion effort, or to providing notification thereof to any person by any means;
(3) using, in connection with a sweepstakes, any written or oral statement, type size, illustration, graphic depiction or design which has the capacity to mislead or deceive the recipient concerning various material facts;
(4) failing to include in a sweepstakes notification particular information described in the bill;
(5) failing to award or distribute all prizes in accordance with the representations contained in the sweepstakes notification;
(6) representing or implying that a premium is free of charge if that premium is conditioned upon the provision of consideration or submission to a sales promotion effort in connection with a promotion;
(7) using, in connection with a promotion, any written or oral statement, type size, illustration, graphic depiction or design which has the capacity to mislead or deceive the recipient concerning certain material facts;
(8) failing to distribute or otherwise make available premiums within the dates represented; and
(9) transferring funds, through any means, from a bank or credit card account of another person without that person's express written consent.
As defined in the bill, "sweepstakes" means a process for awarding prizes in which the element of chance is present and no consideration is required, whether the process is referred to as a sweepstakes, contest, competition, game, puzzle, drawing or by another name; provided that it does not include activities prohibited by Title 2C of the New Jersey Statutes.